Correlation Between Washington Federal and First Savings

Can any of the company-specific risk be diversified away by investing in both Washington Federal and First Savings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Washington Federal and First Savings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Washington Federal and First Savings Financial, you can compare the effects of market volatilities on Washington Federal and First Savings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Washington Federal with a short position of First Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and First Savings.

Diversification Opportunities for Washington Federal and First Savings

0.67

Correlation Coefficient

Washington Federal  First Savings

Poor diversification

The 3 months correlation between Washington and First is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal and First Savings Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Savings Financial and Washington Federal is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Washington Federal are associated (or correlated) with First Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Savings Financial has no effect on the direction of Washington Federal i.e., Washington Federal and First Savings go up and down completely randomly.

Pair Corralation between Washington Federal and First Savings

Assuming the 90 days horizon Washington Federal is expected to generate 0.68 times more return on investment than First Savings. However, Washington Federal is 1.47 times less risky than First Savings. It trades about 0.07 of its potential returns per unit of risk. First Savings Financial is currently generating about 0.04 per unit of risk. If you would invest  1,575  in Washington Federal on April 24, 2025 and sell it today you would earn a total of  60.00  from holding Washington Federal or generate 3.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Washington Federal  vs.  First Savings Financial

Washington Federal

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Washington Federal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Washington Federal is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

First Savings Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Savings Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, First Savings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Washington Federal and First Savings

The main advantage of trading using opposite Washington Federal and First Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal position performs unexpectedly, First Savings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Savings will offset losses from the drop in First Savings' long position.

The idea behind Washington Federal and First Savings Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.